For Your Data U.S. V. E. I. Dupont De Nemours & Co. (Cellophane) Illustration Brief Summary

U.S. v. E. I. duPont De Nemours & Co. (Cellophane) representative brief summary

FACTS
The regime alleged that duPont had a monopoly over cellophane (where it had a marketplace position portion of 75%) inwards violation of the Sherman act, §2.  However, du Pont argued that it entirely participated inwards the flexible packing materials marketplace position (where it had a marketplace position portion of 20%).

DISCUSSION
The Court used a show that looked for reasonable interchangeability need past times consumers to receive upwards one's postulate heed the market.  The Court establish that cellophane was sufficiently interchangeable amongst Pliofilm, greaseproof paper, glassnine, waxed paper, together with foil.

Notable Facts

• The Court establish that cellophane had like prices to alternatives too every bit like physical characteristics together with uses; other products genuinely competed effectively amongst cellophane.

Legal Considerations

• The Court noted that a high cross-elasticity of need would betoken that the products compete inwards the same market.

Analysis

• The representative is perchance virtually notable for the Cellophane fallacy: ignoring the fact that a monopolist already charging supracompetitive prices has a high cross-elasticity of need only the same every bit a theatre without marketplace position mightiness inwards a competitive market.
  • The need cross-price elasticity is non static, but instead is a portion of the cost of the good; at only about point, everything has a substitute.
  • The Cellophane fallacy entirely applies to retrospective analyses (looking for exchange inwards the past), non to prospective analyses (e.g. mergers—unless at that topographic point is evidence of coordination together with supracompetitive prices)

The DOJ together with FTC purpose the Merger Guidelines every bit a method of determining a marketplace position today; they rely upon the actions of a hypothetical monopolist together with whether or non it would impose a “small pregnant but non-transitory growth inwards price,” (the SSNIP test). This show is used to receive upwards one's postulate heed both production markets together with geographical markets.

Evidence considered for production markets (from the Merger Guidelines):

• Evidence that buyers accept shifted or considered shifting purchases betwixt products in answer to relative changes inwards price or other competitive factors.
• Evidence that sellers base of operations their trouble organization decisions on the prospect of buyers switching products inwards the human face upwards of changes inwards price.
• The influence of downstream contest faced past times buyers inwards their output markets.
• The timing together with the cost of switching products.

Evidence considered for geographical markets:

• Evidence that buyers accept shifted or considered shifting purchases betwixt unlike geographical regions in answer to relative changes inwards price or other competitive factors.
• Evidence that sellers base of operations trouble organization decisions on the prospect of buyers switching purchases from unlike geographical regions inwards the human face upwards of cost changes.
• The influence of downstream contest faced past times buyers inwards their output markets.
• Timing together with cost of switching products.

Additional evidence:

• Expert testimony.

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